Coca-Cola Co. has been an Olympics supporter for nearly a century. It counts China as its third-largest market after the U.S. and Mexico. Coke’s challenges heading into the Winter Games are in some ways representative of those of other Western sponsors, and in some ways distinct. Here is a look at the company’s business dealings in China and its Olympic plans as the 2022 Winter Olympics are set to begin in Beijing this week.
Coke Deepens China Ties
Coca-Cola in 2019 struck a deal with China Mengniu Dairy Co. to share the designation of official nonalcoholic beverage sponsors of the Olympic Games through 2032. Chief Executive James Quincey hailed the marriage as a “profound partnership” as he stood beside the Chinese company’s CEO at a news conference in Switzerland. The Beijing Games kicking off Friday mark the first Olympiad in which the joint sponsorship takes effect. The 12-year pact links Coca-Cola to a Chinese business whose largest shareholder is a state-owned food giant. The deal cost the two companies more than $2 billion combined, including rights fees, marketing and other commitments, according to people familiar with the matter.
Coke previously had held the Olympic sponsorship rights for soft drinks, juices, sports drinks and drinkable dairy products. In partnership with Mengniu (pronounced mung-neo), Coke expanded its reach across the entire dairy category, including ice cream and yogurt. The opportunity to share the cost of the sponsorship was also a motivation for Coke to do the deal, some of the people familiar with the matter said.
Tensions Rise
The partnership is coming to fruition at a moment of escalating tensions between the U.S. and China. U.S. officials, along with some lawmakers from other Western countries and some human-rights activists, have said Beijing’s treatment of mostly Muslim minorities in China’s Xinjiang region amounts to genocide. Beijing has rejected criticism of its record and has protested what it calls attempts to politicize the Games. It has also punished companies it determines have waded into the issue.
Coke’s Business Dealings in Xinjiang
The Mengniu deal strengthened Coke’s ties with Cofco Corp., the state-owned foods group that is the dairy company’s largest shareholder. Cofco has worked with Coke for decades to make and distribute the beverage company’s products across northern China, including a bottling plant and sugar supplier in Xinjiang jointly operated by Cofco and Coke.
When the Mengniu deal was announced in June 2019, Coke was already under pressure from human-rights groups asking questions about alleged abuses in its Xinjiang sugar-processing operation. The processor—a joint venture between Coke and Cofco—denied the allegations. The attention on China’s human-rights record increased as the 2022 Beijing Olympics approached. So did criticism of Olympic sponsors.
What Coke Says
In a tense exchange at a July hearing of the U.S. Congressional-Executive Commission on China, Rep. Tom Malinowski (D, N.J.), pressed Coca-Cola’s global head of human rights, Paul Lalli, to condemn the Chinese government’s internment of large numbers of people in camps.
Mr. Lalli declined to do so, replying more generally: “We respect all human rights and condemn any abuses. Our role as a sponsor is to embed those fundamental principles in these mega-sporting events.”
Coke said independent audits of its operations in Xinjiang last year found no evidence of forced labor or other human-rights abuses. China has denied using forced labor and portrays its internment campaign in Xinjiang as part of an effort to fight religious extremism and terrorism.
Coke Pulls Back in U.S.
The geopolitical environment has prompted American companies such as Visa Inc. and Procter & Gamble Co. to lower their profile around the Games. Coke, like other sponsors, is all but silent on the Olympics in the U.S. this year. Last year, as U.S. officials called on Coke and other sponsors to encourage the International Olympic Committee to pull out of Beijing, Coke opted not to offer Olympics-themed displays to U.S. stores. The decision was made because of the risk they could pose to Coke’s reputation, according to a person familiar with the matter. Gone, too, are the special-edition Olympic Coke cans, the TV commercials and the Times Square billboard celebrating a U.S. athlete.
Coke isn’t sending its CEO or other top company officials to Beijing, citing Covid-19 restrictions and the timing of its quarterly earnings report. It declined a Wall Street Journal request to make an executive available to discuss the Mengniu deal. Mengniu and the IOC also declined to comment.
Coke Forges Ahead in China
In China, Coke is celebrating the Games through some online and bricks-and-mortar campaigns. It has released Coke cans there that bear the Olympic Games logo and the Olympic rings, and say “Olympic global partner.” A red minibus with the Coca-Cola and Beijing Olympics logos is appearing at pop-up events in Beijing, carrying a vending machine that offers gifts. Also in the capital, the company has decked some convenience stores with banners, offering Olympics-themed folders and pins to shoppers. On Chinese social media, it is encouraging people to collect its commemorative Olympic pins.
This story has been published from a wire agency feed without modifications to the text
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